Bombardier analyst day expected to showcase CSeries

With the Farnborough Air Show, a major industry event, set to begin in July, Bombardier Inc. has evidently decided to hold a showcase of its own ahead of time with expectations for a major push for its CSeries jets.

Walter Spracklin, analyst with RBC Capital Markets, said the full-day session on June 19th in Dorval, Que. will be open to analysts and expects much of the briefing to be dedicated to the still-in-development CSeries.

“With Farnborough less than a month away, we would be highly surprised if Bombardier would host such a full event if the company was experiencing any major issues with the CSeries,” he said in a note to clients. “We expect management will use this opportunity to showcase once again the merits of the CSeries — and to provide comfort to investors (and customers) that the project is tracking on time.”

If this is the case, Mr. Spracklin expects the results of the day-long briefing to be a positive for shares as the wider analyst community is expecting material delays in the project.

Related

However, there is a possibility Bombardier will use the briefing as an opportunity to manage expectations with regards to both sales of the CSeries and the developmental timeframe, Mr. Spracklin said.

Highlights will include a special CSeries presentation hosted by Mike Arcamone, president of commercial aircraft, as well as a tour of the Mirabel complete integrated aircraft system test area (CIASTA) facility and Bombardier’s latest annual 20-year market forecast for both business and commercial aircraft segments.

The CSeries are twin-engine jet airliners that come in two variants: a 110-seat and 130-seat version.

While the aerospace sector appears to be gravitating towards the belief that the 100-149 seat segment has come and past, Bombardier is clearly making a bet that this is not the case.

“Clearly all of the majors believe this segment to be relevant as their market forecasts point to thousands of new orders over the coming 20 years and while the competition have sought to discredit the CSeries, we believe they are becoming increasingly concerned that the aircraft will be a success,” he said.

With the CSeries expected to take off on its first test flight before the end of the year, Bombardier is currently at the point of “maximum risk” in terms of the development process. As a result, it is not surprising that there would be a valuation discount in the shares.

“However, the magnitude of the discount implied by the share price (43% to peers) is well beyond what we would consider appropriate,” he said. “The key is that significant investment opportunities emerge when emotion and fears are at their highest — and we believe Bombardier represents one such opportunity.”

Investing Videos

Promoted by iShares by Blackrock

Active Investor was produced by Postmedia's advertising department in collaboration with iShares by BlackRock to promote awareness of this topic for commercial purposes. Postmedia's editorial departments had no involvement in the creation of this content.